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2017 (3) TMI 629
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..... valued at Rs. 3,18,73,508/- under section 111 (d) and (o) of the Customs Act, 1962 (Details of imports as per Annexure-A to the said show cause notice). However, I do not impose any Redemption Fine, since the goods have already been cleared without any bond. 11.2 I confirm the duty foregone amount of Rs. 1,15,17,810/- by invoking the provisions of proviso to Section 28(2) {now 28(4)} of the Customs Act, 1962 from them along with interest under Section 28AB (now 28AA) of the Customs Act, 1962. (Details of imports as per Annexure-A to the said show cause notice). 11.3 I impose a penalty of Rs. 1,15,17,810/- (Rupees One Crore Fifteen Lakhs Seventeen Thousand Eight Hundred and Ten Only), equivalent to the duty determined above plus the penalty equal to the interest payable under Section 28 AA [erstwhile Section 28 AB] on M/s USMS Saffron Co. Inc under Section 114 A of Customs Act, 1962. If the duty and interest as demanded above is paid within 30 days of communication of this order, the amount of penalty imposed would be restricted to 15% of the duty or interest as per first proviso to Section 114A ibid subject to the condition that the amount of penalty so determined is also p....
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....62. 11.18 I impose a penalty of Rs. 1,00,000/- (Rupees One Lakh only) on M/s Rama Exports under Section 114AA of the Customs Act, 1962. 11.19 I impose a penalty of Rs. 1,00,000/- (Rupees One Lakh only) on M/s Rani International under Section 114AA of the Customs Act, 1962. 11.20 I do not impose penalty on M/s Mrs. Bectors Food Specialities Ltd. and M/s Ravi Foods Pvt. Ltd. under Section 114(iii) and under Section 114AA of the Customs A 1962. 2. The fact of the case is that M/s. Dharampal Premchand Ltd., imported Saffron under the description of 'Food Flavour' under 11 DFIA Licenses duly transferred in their name in terms of the provisions of Foreign Trade Policy & procedures. The said transferable DFIA Licences were utilised for importing Saffron covered under 7 Bill of Entries. All DFIA Licences were issued against the export of Biscuits as per the Standard Input Output Norms - (E-5). The exporters have discharged the stipulated export obligation and obtained transferability on the said DFIA Licences from the respective Regional Licensing Authorities and transferred the same to third parties in terms of the provisions of the policy and procedure. 3. The appellant pr....
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....ter is not the actual user of the exempt material (imported saffron), the claim of duty exemption under the said DFIAs was in breach of actual user conditions of the SION and thus knowingly suppressed the facts from customs at the time of claiming duty exemption which was admissible on fulfilment of Actual user condition. 7. According to the impugned order, in terms of Para 4.2 read with Para 4.1.3 of the FTP it always required actual use of "Saffron" in the exported Biscuits to be eligible for import without payment of duty on the strength of DFIA issued for export of Biscuits. Since the appellant has failed to produce the evidence of use of saffron on the exported biscuits and accordingly the appellant is not actual user and not eligible to import of saffron without payment of duty and accordingly impugned order demands duty and interest. The department has further relied upon a clarification issued by DGFT vide letter dated 06.08.2015 which clarified that import of saffron is not allowed under the relevant DFIAs. 8. The Ld. Commissioner in the impugned order stated that the cancellation of DFIA is in process and already some DFIA's are cancelled. Accordingly it was contend....
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....o import duty free saffron. (iv) It is an admitted fact that the appeal filed by the Commissioner of Customs against the order of this Hon'ble Tribunal before the Hon'ble Bombay High Court came to be dismissed by an order dated 15.02.2016. In the appeal filed by the department against the judgement of the Hon'ble High Court, the Hon'ble Apex Court has only issued notice to the respondent before it and no stay has been granted by the Hon'ble Apex Court. (v) It was sought to be contended on behalf of revenue that in view of the initiation of cancellation of DFIA by the DGFT and the judgement of the Hon'ble High Court having been appealed to the Apex court, issue needs to be decided a fresh without being bound by it. (vi) The appellant submits that no proceedings to cancel the DFIA's are taken by the DGFT. The alleged proceedings to modify the amendment sheet containing the endorsement of transferability in respect of 3 DFIA's and modification of one DFIA issued to Laxmi International does not in any manner cease to be the binding precedent. (vii) In the case of USMS, the learned AR had relied upon the letter dated 16.10.2014 of the Licensing Authority that the benefit of ....
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....t has not been physically incorporated in the export products because the DFIA scheme allows import of only those inputs which have been used in the manufacture of exported goods". (xi) It appears from paragraph 7.11 of the impugned order that according to the learned Commissioner paragraph 4.2 of the Foreign Trade Policy 2009-2014 provides that "Provisions of paragraph 4.1.3 shall be applicable in the case of DFIA and paragraph 4.1.3 provides that the Advance Authorisation is issued to allow the duty-free import of the inputs which are physically incorporated in export product. (xii) Para 4.1.3 of FTP of 2009-14 stipulates that: An Advance Licence is issued to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts etc. which are consumed/utilised in the course of their use to obtain the export product, may also be allowed under the scheme. As per the cross objections filed by the revenue referring to a DGFT clarification that Para 4.1.3 shall be applicable for DFIA scheme also . On a perusal of the said provisions it is seen that DFIA is initially issued ....
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....technical characteristics, quality and specification as the inputs used in the goods exported applied only to goods specified in para 4.31 of Hand Book of Export Import Procedures. Admittedly saffron is not one such item. That being the case all what is required to be ensured is the goods imported fits into the description, value and quantity of materials specified in the license. We see that no case is made out that such requirements are not met. The Revenue's objection is that saffron is a high value item is of no consequence because when the per unit value is high the quantity that can be imported gets restricted on account of the value restriction of the license. Further when the matter stands clarified by both DGFT and C.B.E. & C. supporting the case made out by the Respondent we do not see any merit in the appeal filed by Revenue. (xix) In his order-in-appeal no. 131/Mumbai/2010 dated 20.12.2010 (pages 390 to 398 of Part III), the Commissioner of Customs (Appeals), after considering the opinion of the Chemical Examiner, office of the Joint Director, Customs House Lab, New Customs House, Mumbai and Institute of Chemical Technology, University of Mumbai, held that Saffron co....
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....A applies only to the sensitive items mentioned in Para 4.32.2 of the Handbook of Procedure. This also flows from the plain terms of Notification No. 40/2006-Cus and 98/2009-Cus. The only requirement of the Notifications is that the imported goods must answer the description of the item mentioned in the DFIA. Since, it cannot be disputed that Saffron answers the description of "Food Flavour" given in the DFIAs, it qualifies for duty free import under the DFIA. The further requirement that apart from answering the description given in the DFIA, the imported goods should be of the same specification, quality and characteristic as that used in the export product applies only in the case of sensitive items specified in paragraph 4.32 of the Handbook. (xxiv) The Biscuits (exported goods) in the present case do not fall under the said list of sensitive items. Reliance is placed in this behalf on the decision of this Hon'ble Tribunal in the case of Global Exim v CC-2010 (253) ELT 417 which has been upheld by the Hon'ble Bombay High Court in 2010 (259) ELT A139. (xxv) When all that the Customs Notification requires is that the imported goods must answer the description of item giv....
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....d in the DFIA. (xxix) It is sought to be contended on behalf of the revenue that the alternative inputs can be imported only when specifically mentioned in SION and example was given of Maida/Aatta/Flour. This contention is contrary to the binding judgment of this Hon'ble Tribunal. This Hon'ble Tribunal, Ahmedabad Bench, in the Final Order No. A/10905/2014-WZB/AHD, dated 1-5-2014 in the case of Uni Colloids Impex P. Ltd. V/s. Commissioner of Customs, Ahmedabad reported in 2014 (310) ELT 483, while considering the question whether the expression that wheat flour would cover wheat gluten held that the wheat gluten is covered by wheat flour and was capable of being used in the manufacture of biscuits and therefore covered by SION E-5 and exemption cannot be denied on the ground of nexus. Similarly, this Hon'ble Tribunal in the case of Khusalcand & Company-2011 (265) E.L.T. 109 (Tri. - Bang.), held: 9. The Hon. CESTAT, after hearing both sides on the matter, vide Final Order No. 1553/09, dated 29-12-2009, held as under : "After hearing both the parties and on going through the written submissions, we are of the opinion that the term 'Flour' and 'Powder' are synonymous....
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....Commissioner has relied upon the Public Notice No. 84 of 2010 dated 23.7.2010 to hold that in respect of Serial Nos. 5(a), (b), (c) and (d) of SION E-5, the import shall be allowed with actual user condition and accountability of actual use on the export side. The Public Notice No.93 dated 1.2.2012 deleted the actual user condition in respect of the items at Serial Nos. 5(a), (b), (c) and (d) of SION. In the present case, there are 11 DFIAs, which are used for import of duty free Saffron. Out of the said 11 DFIAs, 7 DFIAs are issued prior to 23.7.2010. One DFIA is issued post-1.2.2012 and 3 DFIAs are issued between 23.7.2010 and 1.2.2012. In respect of none of the above 11 DFIAs the licensing authority has incorporated actual user condition. In any event, in respect of DFIAs, issued prior to 23.7.2010, the actual user condition cannot be incorporated and likewise to the DFIAs issued post-February, 2012 no actual user condition can be incorporated. (xxxii) The reliance placed by the learned Commissioner on the judgement of the Hon'ble Allahabad High Court in the case of Polyplex Corporation Ltd. reported in 2014 (5) TMI 60 was examined by this Hon'ble Appellate Tribunal ....
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....sued for export of biscuits, clearly justifies that the department was at all times was aware that the Saffron was imported against DFIAs issued for export of biscuits. In each of the aforesaid cases, the main allegation was that the saffron is not used in the manufacture of exported biscuits. The invocation of the extended period is clearly not justified. In any event, the issue is one of the interpretation of the FTP and SION and this Hon'ble Tribunal having held in favour of the importer in identical circumstance the finding of suppression is clearly untenable in law. Considering the overall facts of the case, the issue is squarely covered by the judgement of the Hon'ble Bombay High Court and the order of this Hon'ble Appellate Tribunal and the denial of exemption to Saffron is liable to be set aside and consequently the demand, interest and penalties are liable to be set aside. 10. On the other hand, Shri D.V. Nagvenkar, Ld. Addl. Commissioner (AR) appearing on behalf of the revenue strongly reiterates the findings of the impugned order. He also made the following submissions: (i) The Order of Bombay High Court is in appeal before the Hon. Supreme Court of India. ....
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....Standard Input Output Norms E-5 notified by DGFT. 13. The exporters discharged their export obligation and obtained endorsement of transferability in terms of the provision of Para 4.36A of Hand Book of Procedures. The said DFIA's inter alia permit import of Food Flavour which is mentioned as one of the input required in the export goods. i.e, Biscuits. 14. The appellant imported Saffron under the description of Food Flavour and availed DFIA benefits as per Customs Notifications No. 40/2006-Cus dated 01.05.2006 (FTP - 2004-2009) and 98/2009-Cus dated 11.09.2009 (Policy Period 2009-14). In the instant case all exports are covered under SION E-5 against the export of Biscuits under the 11 DFIA Licenses. 15. The main contention of the department is that as per DGFT Public Notice No. 84/2009 dated 23.07.2010, Serial nos. 1 to 5 of SION E-5 (Biscuits) are subjected to Actual user and accountability of actual use in the export product. The item "Food Flavour" is mentioned under Serial No. 5 (d) of the list of inputs and therefore are subjected to actual user condition. In other words, since the imported goods are Saffron, the appellant is permitted to import Saffron only if the ....
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.... in the argument of the department that Saffron is required to be physically incorporated in the export product. i.e, Biscuits. 19. Admittedly, Saffron is a well known Food flavour as held by the Commissioner of Customs (Appeal), ACC in OIA No. 131/Mumbai/2010/ dated 20.12.2010 after considering the opinion of Chemical Examiner, office of the Jt Director, Custom House, Mumbai and Institute of Chemical Technology, University of Mumbai and permitted import of Saffron against the DFIA issued against export of Biscuits. 20. The department has contended that the said order has been accepted by the Committie of Commissioners on monetary grounds. However, we find from the RTI information submitted by the appellant which evidently shows reasons for accepting the order of the commissioner (appeals) by the Committie of Commissioners was on merits and not on monetary grounds. 21. As regards, the issue of ITC (HS) classification, it was the contention of the revenue that Saffron imported by the appellant falls under Chapter 9, whereas food flavour of Chapter 21 or 33 as mentioned in DFIA Licenses. 22. We find merits in the argument of the appellant that neither the SION refer to an....
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....input item in the export product. However, we find that in the case of Commissioner of Customs, New Delhi Vs. Uttam Singh Manohar Singh in final Order No.C/A/112/12-Cus dated 06.03.2012 held that the revenues objection that saffron is a high value item is of no consequence because when the per unit value is high the quantity that can be restricted on account of the value restriction of the license. 27. We also find that Saffron is not a sensitive input specified under Para 4.55.3 of Hand Book and 4.32.2 of Hand Book (2009-14). Therefore as per Board Circular No. 46/2007 and DGFT Policy Circular No. 50/2008 no correlation is required for technical specification, quality and characteristics of the input used in the export product and the imported goods. 28. The appellant was right in their contention that so long it is not in dispute that saffron imported by the appellant is food flavour, it qualifies for duty free import under DFIA. There is no further requirement that only food flavour which was actually used by the exporter can be imported by the transferee of DFIA. Such a restriction that only the input of the same specification, quality and technical characteristics as use....
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....ment to the effect that assessed as per Commissioner (Appeals) Order accepted by the Committee of Commissioners of Customs vide F.No. S/3-Misc-18/2010 DFIA ACC (Para 7.9 of the impugned order). The endorsements were made by the assessing officer on the face of the Bill of Entry on the basis of the order which was later accepted by the Committee of Commissioners has become final. Therefore in the absence of any challenge on the said order the same became binding on all lower authorities including Customs officers and the Customs Brokers. Judicial discipline requires the department to follow rulings rendered by higher judicial forums. We find the case law in the case of Transsea Services Pvt. Ltd. Vs. Commissioner of Customs (G), Mumbai- 2015(328)ELT 0522 is relevant in this case. Therefore, no action is warranted against the CHA. 34. Similarly, We find that there is no merits in the argument that Shri Nilesh Mota of Jash Mercantile and Mota Trading Pvt Ltd., and partners of Global Exim has deliberately and consciously planned and executed an act of fraud on the revenue with an intention to avail ineligible duty benefits. We find from the debit sheets of the relevant DFIA License....